BaFin Implements Macro-Prudential Measures and Remuneration Ordinance
As part of recent regulatory developments, the Federal Financial Supervisory Authority of Germany (BaFin) announced that the revised "Solvency Regulation (SolvV)" came into force on September 25, 2021. One of the changes involves the addition of a new Section 36a in the Solvency Regulation to provide the legal basis for calculating the capital buffer for systemic risks. BaFin also noted that the "Institute Remuneration Ordinance (InstitutsVergV)," which came into force on September 25, 2021, implements the fifth Capital Requirements Directive (CRD5). Finally, BaFin issued an order pursuant to Section 48 (7) of the German Banking Act (KWG), which recognizes Luxembourg's loan-to-value limit for private residential property financing.
The BaFin order implements a recommendation that the European Systemic Risk Board (ESRB) published on June 11, 2021. The General Board of the ESRB decided to include a macro-prudential measure for loan-to-value (LTV) limits on the new mortgage loans in the residential real estate in Luxembourg to the list of macro-prudential policy measures that are recommended for reciprocation. The ESRB recommendation specified the legally binding LTV limits for new mortgage loans on residential real estate located in Luxembourg, with different LTV limits applicable to different categories of borrowers:
- LTV limit of 100% for first-time buyers acquiring their primary residence.
- LTV limit of 90% for other buyers (that is non first-time buyers) acquiring their primary residence. This limit is implemented in a proportional way via a portfolio allowance. Specifically, lenders may issue 15% of the portfolio of new mortgages granted to these borrowers with an LTV above 90% but below the maximum LTV of 100%.
- LTV limit of 80% for other mortgage loans (including the buy-to-let segment).
Related Links (in German)
- News on Solvency Regulation
- News on Remuneration Ordinance
- News on LTV Measure
- Order on LTV Measure
- ESRB Recommendation, June 2021 (in English)
Keywords: Europe, Germany, Banking, CRD5, Basel, Remuneration, Solvency Regulation, Luxembourg, Systemic Risk, Macro-Prudential Policy, Regulatory Capital, Residential Real Estate, Credit Risk, LTV, RRE, Bafin, ESRB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous Article
APRA Finalizes ARS 720.1, Updates Validation and Derivation RulesNext Article
EBA Updates Filing Rules for Supervisory ReportingRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.